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Why Do Auto Insurance Rates Continue to Increase?

Repair costs and collisions drive costs

As unbelievable as it sounds, insurance companies are struggling to keep pace with changes in auto accidents due to increasing frequency and severity. Over the last several years, carriers struggled to have premiums meet losses and expenses on personal auto policies that they have underwritten. And while the graph below is a few years old, the trend shown has continued.

What are the primary reasons for the increases in losses?

1. An unusual spike in the number of auto collisions

Historically, auto collision frequency has fallen from year to year due to safer vehicles, highway design, and public policy. Unfortunately, the past several years have seen an increase in the number of accidents. Among other factors, the increasing number of miles driven, severe weather, and distracted driving all contribute to this spike in frequency.

2. An increase in the cost of auto collisions

This increase is driven by factors such as:

Rising Repair Costs

This is simple math; as cars become more complex in their systems, it costs more to repair them. Utilization of auto-braking, rearview cameras, and other features are wonderful for safety, but the cost to repair them when damaged is more than just replacing a bumper or a trunk lid.

Rising Medical Costs

We all know that medical costs seem to skyrocket. This makes paying bodily injury and personal protection claims more and more costly.

What is being done to lower auto insurance rates?

Here at Capitol, we don’t ever want to deliver the news that your auto insurance rate is increasing. However, when they do increase, it is important to us that you understand what is causing it and what we and our first-rate carriers do to keep your increases as low as possible, while still providing the coverage you need and deserve.

1. How Capitol works to keep your rate increases as low as possible

We monitor your renewal rates

We monitor your renewal rates to catch even moderate increases and research to find the cause. Often, rate increases are due to activity on your policy such as accidents, tickets, credit score changes, change of address, additional drivers, and additional vehicle or increased coverage. We take the time to remind you of those changes you made and how they have affected your rates.

We compare carriers

We compare carriers when needed to ensure you still have your policy with the best carrier for your situation. Insurance is not all the same. Every carrier’s policy and coverage are different. You can’t be an expert in everything and that is why you have us. We utilize our expertise of different carriers and their policies to know which one best fits your individual needs, provides the most comprehensive coverage, and meets your budget. But at the same time, we refuse to sell you a policy with inadequate coverages, just to save you a few bucks.

We look for discounts

We look for special programs or discounts that might apply to your policy. A good student discount, multiple policy discount, and good credit discount are just a few discounts that might apply. We check to make sure we have given you every discount possible. Make sure you always update your auto-renewal form with any information we request, just in case there might be a new discount we can apply it to your policy.

2. How our carriers work to keep rates from rising

For decades, insurers have worked with industry partners for seatbelt laws, stricter drunk driving enforcement, and better student driver programs. Today they continue to be leaders in traffic safety. They also support the implementation of medical fee schedules to control rising health care costs and pro-competitive measures that result in more efficient and cost-effective body repair. Investments in innovative tools and technology for easier access to online repair service information, to settle claims more efficiently and improve customer service, also help keep rates in check.

While it is never fun to have an auto insurance rate increase, you can trust that here at Capitol, we always have your interests ahead of our own. Reach out to us for any reason, at any time…for peace of mind.